DEM - NSE India

DEM Corporate Office: 1401-1411, 14" Floor, Logix City Center,Sector-32, Noida-201301 (U.P.)

Tel. : 0120- 6013232 / 7290935048

11June, 2021

BSELimited National Stock Exchange of India Ltd. (NSE)Phiroze Jeejeebhoy Towers, Exchange Plaza,Dalal Street, Fort, Bandra Kurla Complex, Bandra(E),

Mumbai — 400 001 Mumbai — 400 051

Scrip Code: 519588 Scrip Code: DFMFOODS

DearSirs,

Sub: Quarterly update

Please find enclosed herewith Quarterly update-Q4 FY 2020-21.

Thanking you.

Yoursifaithfully,For DFM Foods Limited =

ZB 05S\

WY\

(R. §. Tomer)

CompanySecretary

~~

Encl: As above

Regd.Office :8377, Roshanara Road, Delhi-110007 Tel. : 23826445 E-mail : [email protected] : L15311DL1993PLC052624

DFM Foods Quarterly Update – Q4FY21

11th Jun 2021

Organized Salty Snacks Market

2

Organized Salty Snacks Market (INR B)

~21%

Source: Industry Research; Category definition is based on Nielsen categories.

Key Highlights

~200

~290

-

50

100

150

200

250

300

FY17 FY19

Traditional Snacks Potato Chips Extruded Bridged Total

FY17-19

~21%

~19%

~25%

~19%

• INR 290 B Industry that grew at 21% between March 2017 and March 2019

• Key growth drivers:

• Shift from unorganized to organized

• Increasing per capita consumption

• Product innovation

• Higher availability

DFM: At a Glance

3

INR ~60 B1

~25% CAGR

#1

in Extruded Snacks2

#1 in Weighted Reach Pan India

for Extruded Snacks2

1.3M Retailers2

~ 30%3

Negative 30 Days4

20+

Avg. Years of Experience

with Top Mgmt. Team

Note: 1) Extruded market estimate based on Nielsen Data (Pre covid) 2) Nielsen Data 3) RoCE is annualized on YTD basis and calculated as (Adjusted EBITDA - D&A) / Average Capital Employed; Capital Employed = Net fixed assets (Ex-RoU) +

Inventory + Receivables – Trade Payables; RoU refers to Right of Use assets created as per Ind As 116 4) Median Net Working Capital Days

Large Market with Strong

Growth

Leading Brand in Extruded

Snacks Best in Class Reach

Attractive RoCE Negative Working Capital

Cycle

Professional Management

Team

Product Portfolio Evolution

Rings

‒ Extruded

‒ Corn-based rings; loop

them around your fingers

‒ Kids focused; comes with a

fun toy in 7 flavors

Natkhat

‒ Range of traditional

namkeens

‒ Extruded

‒ Crunchy wheat

puff

Curls

‒ Extruded

‒ Corn-based soft

textured snack; melts in

the mouth

‒ Comes in may flavors

Cheese Balls

‒ Extruded

‒ Light and crispy

balls with a rich

taste of cheese

Fritts

‒ Extruded

‒ Light and crispy

sticks made of corn

and potatoes

‒ 5 flavors

Pasta Crunch

‒ Pellets

‒ Crunchy taste with

a unique Chinese

Tadka flavor

‒ 2 flavors

Launched in 1984

Namkeen

Launched in 2017 Launched in 2018 Launched in 2019

4

New Launches – Last 12 months

5

New Segment New Flavors New Price Points

Test marketed in

Q3FY21

New variant in

Q2FY21 Potato Chips : Launched in Uttar

Pradesh in Q4 FY 21

New Products

Management Team

Lagan Shastri, Managing Director & CEO

• Ex-ED Operations, Hindustan Coca Cola Beverages

• 22 years of experience in FMCG Industry

• MBA, IIM Bangalore

Davinder Dogra, CFO

• Ex- CFO (Retail Assets) at DLF

• 23 years of experience of in Finance & Accounts

• Past stints at PepsiCo, Pernod Ricard, and Airtel

Kunal Bhardwaj, Head of Sales

• Ex-VP Business Ninja Cart. Past stints at Britannia, Diageo,

Marico

• 17 years of experience in FMCG Sales

• MBA, IIM Kozhikode

Sushil Garg, Head of Supply Chain

• Ex-Director of Manufacturing at GSK Consumer; spent

18 years at PepsiCo Foods

• 27 years of experience in Manufacturing & Supply Chain

Karan Gadhoke, Chief Transformation Officer

• Ex-Deputy GM, Group Strategy Office, Mahindra Group

• 8 Years of experience across corp. strategy, sales and

marketing

• MBA, IMT Ghaziabad

Nepal Singh, Head of New Product Development

• Ex-VP, R&D at Haldiram

• Past Stints at Perfetti, FPDRL (Athens, GA)

• 30 years of experience in Snacks Food Industry

• Ph.D. (Food Tech), Post Doctorate from Purdue

Rajat Nanda, Chief Marketing Officer

• Ex- Head of Marketing (Hair Care) at Dabur.

• 19 years of marketing experience in FMCG Industry

• Previous stints at Perfetti, United Breweries

Kajal Debnath, Chief Regulatory Officer

• Ex-Head of Regulatory Affairs at Mother Dairy

• 26 years of experience in snacks

• Previous stints at Cargill, and CII

MS Venkatesh, Chief Human Resources Officer

• Ex-Director of HR at Coca Cola, India

• 29 years of experience in Human Resources

• Previous stints at Edu comp,Max NY Life, PD Hinduja Hospital

Rajat Jain, Head of IT

• 16 years of experience in IT

• Ex-GM of IT at Emami Agrotech

• Previous stints at Valvoline, PwC, and Capgemini

• MBA, IIM Indore; B. Tech: IIT Roorkee 6

Board of Directors

7

Manu Anand, Non-Executive Director

• Ex-President, Mondelez, AMEA; Ex-Chairman & CEO,

PepsiCo India

• 35+ years of experience in FMCG Industry

• Credited with building the food business at PepsiCo.

virtually from scratch; Built PepsiCo into India’s #1 snacks

brand (“Lays”, “Uncle Chipps”, “Kurkure”)

VL Rajesh, Non-Executive Director

• Ex-CEO, ITC Foods

• 30+ years of experience in FMCG Industry

• Part of founding team which identified and set up the ITC

foods business and scaled it into India’s #3 player; built

multiple brands e.g. “Ashirvaad”, “Sunfeast”, “Yippee”;

created “Bingo” into India’s #2 snacks brand with a pan-

India presence across multiple salty snacks categories

Hemant Nerurkar, Independent Non-Executive Director,

Chairman of the Board

• Ex-MD, Tata Steel India

• 35+ years of experience in Steel Industry

Anil Chanana, Independent Non-Executive Director

Chairman of the Audit Committee

• Ex-CFO, HCL Technologies

• 30+ years of experience in Finance

Sahil Dalal, Non-Executive Director

• Managing Director, Advent India

• 15+ years of experience in Private Equity / Finance

Dipali Sheth, Independent Non-Executive Director

• Ex-Country Head of Human Resources at Royal Bank of

Scotland, India

• 23+ years of experience in Human Resources

Lagan Shastri, Managing Director & CEO

• Ex-ED Operations, Hindustan Coca Cola Beverages

• 22 years of experience in FMCG Industry

• MBA, IIM Bangalore

Strategic Roadmap

8

Portfolio

Excellence

Brand

Excellence

Go To Market

Excellence

Operational

Excellence

Stakeholder Value Creation

Technology

Excellence

Execution Excellence

People

Excellence

Personal Leadership & Courage

Integrity, Transparency, Empathy

Q4 FY’21: Key Highlights

9

Market Update:

• Q4 FY21: Salty snacks industry grew by ~2% YoY; extruded continued to decline by ~13% YoY

• FY21: Salty snacks industry declined by ~15% YoY; extruded market declined by ~23% YoY

Company Update

• Continued share gain: All India share gain in Q4 of ~200 bps YoY; higher gain in core geography

• Resilient product portfolio: Investment in Fritts, Curls & Natkhat paying off

• New segment entry: Entered Potato Chips with 3 flavours in Uttar Pradesh @ Rs 5 / Rs.10

• Improved margins: Material margins improved by ~30 bps QoQ despite commodity inflation

• Brand building: Advertising more than doubled in Q4 FY21 to 7.1% of sales vs. 3.1% in Q4 FY20

• Go to market: Initiated reach expansion drive in focus geographies; continue to expand in ecommerce and large

stores

• Technology: Launched sales force automation tool in core geography

• Credit rating: Crisil credit rating upgraded in February 21 to A-/Stable from BBB+

• Vaccination: ~50% of employees vaccinated; vaccination extended to other stakeholders. Vaccination push to

continue through additional vaccination drives; biggest challenge being vaccine hesitancy

• Dividend: Declared a dividend of Re 1 per share.

Q4’21: Financial Update – Quarterly P&L

10

Abridged Quarterly Financials

Note: a) Deal related one time expenses incurred in Q4FY20 for expenses towards transaction expenses, professional charges incurred for hiring new management team and land conversion and land conversion in Q4FY21. b) COVID-19 related claims.

Key Highlights

• Revenue growth of ~20.7% YoY vs market decline of ~13% YoY

• Material margin expanded by 510 bps YoY and 30 bps QoQ despite high commodity inflation

• Advertising spend increased by 178.5% YoY to 7.1% of net sales vs. 3.1% of net sales in Q4 FY20

• EBITDA (adjusted for ESAR and deal related one time expenses) decline by 11.7% YoY due to higher advertising spend.

INR M Mar-20 Mar-21 YoY Gr. Dec-20

Net Sales 1,097.6 1,324.8 20.7% 1,353.8

Less: COGS 702.1 780.9 11.2% 801.6

Material Margin 395.5 543.9 37.5% 552.2

% of Net Revenue 36.0% 41.1% 40.8%

Less:

Employee Cost 120.8 137.1 13.5% 126.0

Advertising 33.8 94.2 178.5% 56.4

Other Expenses 219.9 247.7 12.7% 205.2

Reported EBITDA 21.0 64.9 209.0% 164.7

% of Net Revenue 1.9% 4.9% 12.2%

Less:

D&A 27.5 37.6 36.7% 31.7

Reported EBIT (6.5) 27.3 NA 133.0

% of Net Revenue -0.6% 2.1% 9.8%

Less: Finance Cost 25.1 25.9 3.2% 24.6

Add: Other Income 17.5 12.3 -29.7% 19.4

Reported PBT (14.1) 13.7 NA 127.8

% of Net Revenue -1.3% 1.0% 9.4%

Less: Taxes (1.8) 4.7 33.0

Reported PAT (12.3) 9.0 NA 94.8

% of Net Revenue -1.1% 0.7% 7.0%

Reported EBITDA 21.0 64.9 209.0% 164.7

Add:

ESAR Expenses 2.5 13.1 434.3% (0.8)

Deal related one time expensesa 45.2 9.5 (79.0%) -

COVID related one time expensesb 30.5 - (100.0%) -

Adjusted EBITDA 99.2 87.5 -11.7% 163.9

% of Net Revenue 9.0% 6.6% 12.1%

Q4’21: Financial Update – Annual P&L

11

Abridged Annual Financials

Note: a) Deal related one time expenses incurred in FY20 for expenses towards settlement of retiring employees, transaction expenses, professional charges incurred for hiring new management team and land conversion and land conversion in FY21.

b) COVID-19 related claims.

Key Highlights

• Revenue growth of 3.2% YoY vs market decline of ~23% YoY

• 60 bps material margin expansion despite high commodity inflation

• Advertising spend increased by 29.8%

• Adjusted EBITDA grew by 4.3% YoY

INR M FY20 FY21 YoY Gr.

Net Sales 5,079.4 5,240.6 3.2%

Less: COGS 3,053.3 3,118.8 2.1%

Material Margin 2,026.1 2,121.8 4.7%

% of Net Revenue 39.9% 40.5%

Less:

Employee Cost 549.2 542.9 (1.1%)

Advertising 148.4 192.7 29.8%

Other Expenses 911.5 829.8 (9.0%)

Reported EBITDA 417.0 556.4 33.4%


Less:

D&A 113.5 131.8 16.1%

Reported EBIT 303.5 424.6 39.9%


Less: Finance Cost 99.2 108.0 8.9%

Add: Other Income 67.8 69.2 2.1%

Reported PBT 272.1 385.8 41.8%


Less: Taxes 27.9 98.8

Reported PAT 244.2 287.0 17.5%


Reported EBITDA 417.0 556.4 33.4%

Add:

ESAR Expenses 9.8 27.0 174.5%

Deal related one time expensesa 111.0 9.5 (91.4%)

COVID related one time expensesb 30.5 - (100.0%)

Adjusted EBITDA 568.3 592.9 4.3%


Q4’21: Financial Update – Balance Sheet

12

Balance Sheet

Source: Company Data

Note : * Net Working Capital excludes Bank Balances & Investments

Key Highlights

• Negative working capital* continues

• Company’s cash position continues to remain healthy

INR M Mar-20 Dec-20 Mar-21

Bank balances and investments 918 1,089 1,090

Inventory 240 238 265

Receivables 1 - 40

Other current assets 49 66 123

Total Current Assets 1,207 1,393 1,518

Fixed Assets (incl CWIP) 1,818 1,804 1,800

RoU 487 471 626

Other assets 160 149 99

Total Assets 3,672 3,818 4,043

Payables 548 490 556

Other curent liabilities 105 111 116

Other financial liabilities 232 227 228

Short Term Debt 47 10 -

Current Liabilities 931 837 900

Long Term Debt 783 729 713

Lease Liabilities 278 282 447

Other Liabilities 76 77 58

Deferred Tax Liabilities 149 142 144

Non Current Liabilities 1,286 1,230 1,362

Equity 1,455 1,752 1,781

Total Equity + Liabilities 3,672 3,818 4,043

Net Debt (88) (351) (377)

Q4’21: Financial Update – Cash Flow

13

Cash Flow

Source: Company Data

Key Highlights

• Company’s cash position continues to remain healthy

• Debt repayment of ~120 M in FY 21

• Capex of ~100 M in FY 21 for investment in capacity addition and automation

QUARTER ANNUAL

INR M Mar-20 Mar-21 Mar-20 Mar-21

Reported EBITDA 21 65 417 556

Change in WC 9 (55) 96 (107)

Income tax paid (1) (12) (106) (100)

Capex (21) (26) (241) (97)

Interest paid (25) (25) (94) (83)

Interest received 10 13 34 41

Others 1 63 (6) 76

FCFF (6) 23 100 287

Debt issued / (paid) (55) (22) (33) (122)

Dividend paid (including DDT) - (0) (75) (1)

Equity raised/option exercised 5 0 5 8

Net Cash generated (56) 1 (3) 173

Opening Bank Balances and Investments 974 1,089 921 918

Closing Bank balances and Investments 918 1,090 918 1,090

Q4’21: Financial Update – Key Ratios

14

Material Margin1

36.0%

40.8% 41.1%

32.0%

34.0%

36.0%

38.0%

40.0%

42.0%

Mar-20 Dec-20 Mar-21

Adjusted EBITDA Margin2 Adjusted PAT Margin3

9.0%

12.1%

6.6%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%


4.4%

7.0%

2.0%

0.0%

2.0%

4.0%

6.0%

8.0%


Note: 1) Material Margin is defined as Net Revenue less COGS/ Net Revenue 2) Adjusted EBITDA is calculated by adding back ESAR & deal related expenses to Reported EBITDA 3) Adjusted PAT is calculated by adjusting PBT for ESAR & deal related

expenses and applying the annual normal tax rate.

FY 21: Financial Update – Key Ratios

15

Material Margin1

39.9%

40.5%

38.0%

38.5%

39.0%

39.5%

40.0%

40.5%

41.0%

Mar-20 Mar-21

Adjusted EBITDA Margin2 Adjusted PAT Margin3

11.2% 11.3%

8.0%

8.5%

9.0%

9.5%

10.0%

10.5%

11.0%

11.5%

Mar-20 Mar-21

6.5%

6.0%

5.0%

5.5%

6.0%

6.5%

7.0%

Mar-20 Mar-21

Net Debt / Adj. EBITDAx4 RoCE5 RoE6

30.2% 30.1%

15.0%

20.0%

25.0%

30.0%

35.0%

Mar-20 Mar-21

-0.2x

-0.6x -0.7x

-0.6x

-0.5x

-0.4x

-0.3x

-0.2x

-0.1x

0.0x

Mar-20 Mar-21

24.1% 19.3%

0.0%

10.0%

20.0%

30.0%

40.0%

Mar-20 Mar-21

Note: 1) Material Margin is defined as Net Revenue less COGS/ Net Revenue 2) Adjusted EBITDA is calculated by adding back ESAR & deal related expenses to Reported EBITDA 3) Adjusted PAT is calculated by adjusting PBT for ESAR & deal related

expenses and applying the normal tax rate 4) Net Debt/EBITDA is calculated on Adjusted EBITDA 5) RoCE is calculated as (Adjusted EBITDA - D&A) / Average Capital Employed; Capital Employed = Net fixed assets (Ex-RoU) + Inventory + Receivables

– Trade payables; RoU refers to Right of Use assets created as per Ind As 116. 6) RoE is calculated as Adjusted PAT /Average Shareholder’s Equity

Documents

DEM - NSE India